1.Incorporation

Q5 (Contributions in Kind)

Is it complicated to make contributions in kind instead of in cash for shares?

In cases of contributions in kind, there is an issue of whether or not the value of the shares equals the value of the contributed property. So, in principle, a third party valuation is required. The third party valuation requires selection by a court of the evaluator, which can be an expert, such as a public accountant, and the payment of the cost of the evaluation. And the process takes time. So, there is a significant cost, both in terms of time and money, especially for entrepreneurs. However, there are also certain exceptions from the valuation requirement, such as cases where the supposed value of the contributed property (the amount that the company deems to be the invested amount) is less than 5,000,000 JPY.

(Posted: January 27, 2012)